Arthur Levitt: The last person Goldman Sachs needs as an advisor

Goldman Sachs (GS) announced the hiring of former SEC chairman Arthur Levitt as an adviser on public policy and other issues. Levitt was chairman of the SEC from July of 1993 to February of 2001, sitting idly by while the world watched the internet bubble build-up and crash, major conflict of interest scandals at top Wall Street investment banks and of course the implosion of companies like Enron and Worldcom. What does Goldman have to say about all that?

"Arthur's experience and deep knowledge of our industry will be of tremendous value to our firm," CEO Lloyd C. Blankfein said in a press release. "We look forward to having the benefit of his insight on a range of issues relating to the firm and financial services in general."

Like me, financial journalist Gary Weiss isn't buying it. He writes on his blog that the hiring of Levitt might be motivated by gratitude: "Goldman and the rest of the Street owe Levitt, big time. When he was chairman of the SEC, the agency did absolutely nothing to regulate derivatives or hedge funds, did nothing to rein in executive compensation, took only tepid steps to curb brokerage sales practices. In general, you name it, Artie didn't do it."

If Goldman Sachs is serious about ushering in a new era of transparency and long-term-oriented stewardship on Wall Street, Arthur Levitt is the last guy that they should be hiriing: Levitt represents the laissez-faire regulation and if that isn't bad enough, he's a former employee of AIG (AIG).

Weiss also suggests that Levitt's hiring may be a "fig leaf", designed to project an image of a commitment to good corporate governance. But isn't Levitt a little infamous to serve well in that role?